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Consumer Express Highest Uncertainty Over Long-Run Inflation Since 1991

US DATA
The final UMich report on inflation makes for interesting reading - much of expectations decline down to college-educated consumers reacting to the Fed rate hike:
  • In contrast, long run expectations receded from the mid-month reading of 3.3% and settled at 3.1%, back within the 2.9-3.1% range seen in the past 10 months. Initial evidence suggests that college-educated consumers, who were more likely to be aware of Fed policy, exhibited larger declines in expectations after the preliminary reading than other consumers.
  • Overall, the late-June reversion in long run inflation expectations was generated by growth in the share of consumers expecting extremely low inflation in the years ahead. About half of these consumers expressed bleak views about the risks of recession or unemployment during the interviews.
  • These pessimistic views contributed to general uncertainty over inflation, which continued to escalate after the mid-month reading. In fact, consumers expressed the highest level of uncertainty over long-run inflation since 1991.
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The final UMich report on inflation makes for interesting reading - much of expectations decline down to college-educated consumers reacting to the Fed rate hike:
  • In contrast, long run expectations receded from the mid-month reading of 3.3% and settled at 3.1%, back within the 2.9-3.1% range seen in the past 10 months. Initial evidence suggests that college-educated consumers, who were more likely to be aware of Fed policy, exhibited larger declines in expectations after the preliminary reading than other consumers.
  • Overall, the late-June reversion in long run inflation expectations was generated by growth in the share of consumers expecting extremely low inflation in the years ahead. About half of these consumers expressed bleak views about the risks of recession or unemployment during the interviews.
  • These pessimistic views contributed to general uncertainty over inflation, which continued to escalate after the mid-month reading. In fact, consumers expressed the highest level of uncertainty over long-run inflation since 1991.